Asiaphoria and its Implications for Business

This article discusses the argument of Asiaphoria and its implications for business. It also talks about the persistence of growth rate and the importance of improving policy environment and government for steady growth.

Running head: ASIAPHORIA AND ITS IMPLICATIONS FOR BUSINESS
Asiaphoria and its Implications for Business
Name of the student
Name of the University
Author note

1ASIAPHORIA AND ITS IMPLICATIONS FOR BUSINESS
Answer 1)
Forecasts in relation to the global economy over the long term make a prediction that the
economic gravity will shift towards that of the Asian giants like that of China and India. The
central argument of Asiaphoria is that the growth of India along with China may be slow than
what is anticipated presently. The argument of Asiaphoria suggests that past performance does
not necessarily guarantee that of future performance. Regression to that of the mean is an
empirical important fact in relation to cross-national growth rate (Pritchett and Summers 2014).
Lack of the factor of persistence in relation to that of country growth rate suggests that the
current growth has less predictive power in relation to that of the future growth. Risks in relation
to downside scenario is often underestimated and the fragility of the systems is often
underestimated.
The central argument of the article is that within the developing countries growth is
marked by sharp discontinuity and large accelerations or decelerations in relation to growth can
be said to be very common (Imai et al. 2014). The rapidly growing countries will suffer
downward continuity in relation to growth than that of an upward movement. The central
argument of Pritchett and Summers suggests that the decline in relation to growth will be sudden
and large rather than gradual. With the help of four measures of persistence- correlation, rank
correlation, regression coefficient of that of current growth on that of lagged growth and that of
the R-sqaure of Regression. Computation carried out helped in revealing strong regression to that
of the mean and that of low persistence (Morley 2015). Past growth does not point forward to the
path of future growth and its ability of prediction is low over that of long horizon.

2ASIAPHORIA AND ITS IMPLICATIONS FOR BUSINESS
Answer 2)
I agree with the argument put forward by Pritchett and Summers that the current growth
of a country does not clearly indicate that it would continue to do so in the future. It has been
seen that the public figures appearing on that of the cover of Time tend to suffer in their career
sonn afterwards. This kind of scenario can be applied to the mean reversion along with that of
extrapolative expectation (Rogatnykh 2015). Those who give good performance in the period of
“t” will on average basis can perform much badly in another time period “ t+1”. There are many
models that suggest that the features of the countries remain the same and hence the element of
growth will persist (Pritchett and Summers 2014). One expects that if these kind of variables
persist then the growth rate would also persist.
It has been found with the help of data by that of Pritchett and Summers that the rate of
growth does not persist. I agree with their view that constant features have an effect on that of
the level more than the medium to that of long period growth of that of the income. I agree with
their perspective that a country should focus on the aspect of improving the policy environment
and that of the government in order to grow at a steady pace (Imai et al. 2014). The most
favourable conditions can have diminishing impact on that of the growth.
Assuming the continuous current growth rate the gain in GDP from that of the year 2013
to that of 2033 would become $ 51.1 trillion that is a gain more than that of three times and it is
as large as that of the current US economy. Regression in relation to the mean of ordinary type
would considerably reduce the gains to a great extent. The empirical estimate suggests that the
GDP of China would subside to around $ 20 trillion that suggests a 20 year increase in that of
GDP of around that of $ 11 trillion (Imran et al. 2015). I agree with the view of Pritchett and
Summers the long run stability in relation to the OECD countries can pave the path for that of

3ASIAPHORIA AND ITS IMPLICATIONS FOR BUSINESS
misleading thought. They are right when they say that regression to that of the mean wins in the
case of extrapolation of the growth rate.
Answer 3)
It has been found that high level of output on the basis of per capita is associated with
high level of that of institutional capacity. In the long period this kind of an association can be
sustained so that arrangements related to institutions can have effects that are long-lasting. This
view can help in accommodating short-run growth boom which is propelled by that of exogenous
factors like that of term of trade. It is found that the countries that have weak capability in
relation to implantation of policies have large difference between that of de jure laws and that of
de facto outcome in relation to the specific firm.
It is found that the less democratic countries have the tendency of higher volatility in
relation to the growth (Chan, Xu and Gao 2015). The strict economic measures of China can
help in bolstering growth and brand like that of Volkswagen can flourish in the market.
Democracies can help in sustaining growth in that of the long run however the transition can
creates a period of that of slow growth. The power in China is controlled by that of regionally
competing force that would help Volkswagen AG to succeed in the market. China does not have
much control over that of corruption but this has not proved to be a deterrent for the growth of
the industries.
Volkswagen AG can employ quality staff that can help it to sustain in the market of
China and India. It can employ expatriates in the position of senior management that can help
Volkswagen AG in getting greater operational control. The expatriate managers should have
knowledge regarding Chinese cultural along with business practice that can help them in gaining

4ASIAPHORIA AND ITS IMPLICATIONS FOR BUSINESS
a competitive edge in that of the market (Blackwelder et al. 2016). A local distributor can be
appointed that can help in the process of entering the market of the Asian countries. Verifying
the trustworthiness of the employees can help in the process of expansion of business of
Volkswagen AG.

5ASIAPHORIA AND ITS IMPLICATIONS FOR BUSINESS
References:
Blackwelder, B., Coleman, K., Colunga-Santoyo, S., Harrison, J.S. and Wozniak, D., 2016. The
Volkswagen Scandal.
Chan, K.S., Xu, X. and Gao, Y., 2015. The China growth miracle: The role of the formal and the
informal institutions. The World Economy, 38(1), pp.63-90.
Imai, K.S., Gaiha, R., Ali, A. and Kaicker, N., 2014. Remittances, growth and poverty: New
evidence from Asian countries. Journal of Policy Modeling, 36(3), pp.524-538.
Imai, K.S., Gaiha, R., Ali, A. and Kaicker, N., 2014. Remittances, growth and poverty: New
evidence from Asian countries. Journal of Policy Modeling, 36(3), pp.524-538.
Imran, M., Mughal, K.S., Salman, A. and Makarevic, N., 2015. Unemployment and Economic
Growth of Developing Asian Countries: A Panel Data Analysis. European Journal of Economic
Studies, (3), pp.147-160.
Morley, J.W., 2015. Driven by Growth: Political Change in the Asia-Pacific Region. Routledge.
Pritchett, L. and Summers, L.H., 2014. Asiaphoria meets regression to the mean (No. w20573).
National Bureau of Economic Research.
Rogatnykh, E., 2015. Economic Growth of BRICS Countries and Opportunities of Mutual Trade
Relations Expansion. Economic Policy, 2, pp.77-92.